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Open Music Model
The Open Music Model, or OMM, is an economic and technological framework for the recording industry proposed in 2003 , based on research conducted at the Massachusetts Institute of Technology , which asserts that the only long-term viable system for the digital distribution of music is a subscription-based peer-to-peer system free of digital rights management (DRM) software. Overview The OMM operates by changing the way consumers interact with the digital property market: rather than being seen as a good to be purchased from online vendor such as iTunes, music would be treated as a service being by the industry. In the same way that Comcast provides movies and television shows to its consumers, firms based on the OMM will serve as the intermediaries between the music industries and its consumers. After the failure of commercial solutions to piracy, such as the iTunes Store and BuyMusic.com, which attempt to sell individual songs for $1 a piece, the OMM was devised to create a market where consumers will have unlimited access to music downloads for the price of $5 per month (as of its publication in 2003). The research shows that this will be the market clearing price, expected to bring in a total revenue of approximately 3 billion dollars per year. The OMM asserts that there are five necessary requirements for a viable commercial music digital distribution network : Reasoning A study conducted in July of 2003 provided the following demographics for file sharers in the United States: • 29% of internet users illegally download files to their computers • 21% of internet users share files with others (such as in peer-to-peer networks) • 51% of those aged 18 to 29, and 53% of those 12 to 17 had downloaded music • Nearly three-quarters of boys aged 15-17 had downloaded music • 6 million individuals would be looking for music to download on any given day The study conducted by MIT uses these figures to demonstrate the obvious demand for 3rd party file sharing programs. Insofar as the interest for a particular piece of digital property is high, and the risk of acquiring the good through illegitimate means is low, people will naturally flock towards 3rd party services such as Napster and Morpheus (more recently, Bittorrent and Piratebay) Response Criticisms of the model included that it did not address the issue of piracy . Others argued that it was in fact a solution to piracy , since piracy was "inevitable". Supporters argued that it offered a superior alternative to the current law-enforcement based methods used by the recording industry . Industry adoption Several aspects of the OMM have been adopted by the recording industry and its partners over time: * The underlying research indicated that a $5 per month subscription was the optimal price point to maximize consumer participation as well as revenue. In 2005, Yahoo! Music was launched with that price point. The combination of a subscription model and digital downloads (as opposed to streaming) did not come until later. In 2010, Rhapsody announced a download capability for their subscribers using iPhones. * Some principles, such as Open Payment, were relatively straightforward to implement, and the iTunes Store offered gift cards, which could be purchased with cash, from its launch in 2003. * The adoption of Open File Formats was more complex, and represented a major shift for the industry. In 2007, Steve Jobs, CEO of Apple Inc., published a letter calling for an end to DRM in music. A few months later, Amazon.com launched a DRM-free music store . One year later, iTunes Store abolished DRM on most of its music. * One technology startup, Playment, is working on adapting the entire OMM to a commercial setting as the basis for its business model . See also * Comparison of online music stores * Disk sharing * Ethics of file sharing * File sharing * File sharing timeline * File-sharing program * Peer-to-peer * Record industry * Threshold pledge system References External links * The Open Music Model (white paper, 2003) Category:Business models Category:Computer law Category:Copyright law Category:File sharing Category:Free music Category:Music industry Category:Open content Category:Peer-to-peer file sharing Category:Internet terminology Category:Intellectual property law